Yes, you can name a beneficiary on most savings accounts, and it bypasses probate

You can name a beneficiary on a savings account at nearly every bank and credit union. When you die, the money in that account goes directly to the person or people you name—it does not go through your will or probate court. The bank handles the transfer once they see a death certificate.

This is different from leaving money in your will. A will goes through probate, which takes months or years and costs money in court fees. A beneficiary designation on a savings account is faster and costs nothing. The money moves within weeks in most cases.

You can name one beneficiary or split the account among several. You can also name a backup beneficiary (called a contingent beneficiary) who receives the money if your first choice dies before you do. The account itself stays in your name while you are alive—the beneficiary has no access to it until you die.

Key Takeaways

  • Money in a savings account with a named beneficiary bypasses probate and goes directly to that person when you die, without court involvement.
  • You name a beneficiary by filling out a form at your bank; the process takes minutes and costs nothing.
  • You can name multiple beneficiaries and decide what percentage each one receives, or name a contingent beneficiary to receive the money if your first choice dies before you do.
  • The beneficiary has no access to the account while you are alive, even if they are named.
  • If you do not name a beneficiary, the money becomes part of your estate and goes through probate according to your will or your state's intestacy laws.

How to name a beneficiary at your bank

Contact your bank or log into your online account and look for a section called "beneficiary," "transfer on death," or "payable on death." Some banks call it a TOD account or POD account. You will fill out a form with the beneficiary's full legal name, date of birth, and Social Security number or tax ID. If you are naming more than one person, you will specify what percentage each person gets.

The form takes about five minutes. You do not need a lawyer or notary. Some banks let you do it online; others require you to print, sign, and mail it or bring it to a branch. Call your bank's customer service line if you cannot find the form—they can email it to you or walk you through it over the phone.

Once the bank receives the completed form, they update their records. You will usually get a confirmation letter in the mail within one to two weeks. Keep that letter in a safe place. When you die, your family will need to show the bank a death certificate, and the bank will release the money to the beneficiary.

Naming multiple beneficiaries and contingent beneficiaries

You can split a savings account among as many beneficiaries as you want. If you name three people, you decide whether each gets an equal third, or whether one gets 50 percent and the other two get 25 percent each. You control the split entirely.

A contingent beneficiary is a backup. If you name your spouse as the primary beneficiary and your spouse dies before you do, the contingent beneficiary receives the money instead. Without a contingent beneficiary, the money goes into your estate if your primary beneficiary dies first. You can name contingent beneficiaries for each primary beneficiary, or one contingent beneficiary to receive everything if all primary beneficiaries are deceased.

Review your beneficiary designation every few years, especially after major life changes like marriage, divorce, or the birth of a child. If your circumstances change and you do not update the form, the money still goes to whoever is listed—your will cannot override a beneficiary designation.

What happens to the account after you die

When you die, your family or executor should notify the bank. They will need to provide a certified copy of your death certificate. The bank verifies the death certificate and then transfers the money to the beneficiary or beneficiaries you named. This usually takes two to four weeks, though some banks move faster.

The beneficiary does not have to go to court. They do not have to wait for probate to finish. The money is theirs to withdraw or use as they wish once the bank releases it. If the account has a small amount of money, some banks process it in days rather than weeks.

If you named multiple beneficiaries, each one receives their share. If you named one beneficiary and they are deceased, the money goes into your estate and is distributed according to your will or your state's intestacy laws—which means it does go through probate.

Beneficiary designations versus joint accounts

A beneficiary designation and a joint account are not the same thing, and they work very differently. With a joint account, the other person has access to the money right now, while you are alive. They can withdraw, spend, or move the money without your permission. With a beneficiary designation, the named person cannot touch the account until you die.

A joint account also does not always avoid probate. It depends on how the account is titled. Some joint accounts pass to the surviving owner automatically; others become part of the deceased owner's estate. A beneficiary designation is clearer and more predictable.

If you want someone to help manage your money while you are alive, a joint account or a power of attorney makes sense. If you only want them to have the money after you die, a beneficiary designation is the right choice.

If you do not name a beneficiary

If you die without naming a beneficiary, the savings account becomes part of your estate. The money is distributed according to your will, or if you do not have a will, according to your state's intestacy laws. This process goes through probate court.

Probate takes time—usually six months to two years depending on the state and the complexity of your estate. It also costs money in court fees and attorney fees. The beneficiary has to wait for the court to finish before they receive anything.

Naming a beneficiary avoids all of this. It is the simplest way to make sure the money goes where you want it to go, and it gets there quickly.

Frequently Asked Questions

Can I change or remove a beneficiary after I name one?

Yes. Contact your bank and ask for a new beneficiary form. Fill it out with the new information and submit it. The bank will update their records, and the new beneficiary designation takes effect. You can change it as many times as you want while you are alive.

What if I name someone who is a minor?

You can name a minor as a beneficiary. When you die, the bank will release the money to a court-appointed guardian or conservator, or to a custodian if you named one in your will. The money cannot go directly to a child under 18 in most states. Talk to your bank about how they handle this situation.

Does naming a beneficiary affect my taxes?

Naming a beneficiary does not create a tax event while you are alive. When you die, the beneficiary may owe income tax on any interest the account earned after your death, depending on the amount and their tax situation. They do not owe inheritance tax on the money itself in most states. A tax professional can advise you on your specific situation.

Can my creditors take money that goes to a beneficiary?

In most cases, no. Money that passes to a beneficiary through a TOD or POD designation is protected from creditors. However, if your estate owes debts, the court may go after other assets first. The rules vary by state, so check with a local attorney if you have significant debts.

What if the beneficiary dies at the same time I do?

If you and your beneficiary die in the same accident or within a short time of each other, the money usually goes to your contingent beneficiary if you named one. If you did not name a contingent beneficiary, the money becomes part of your estate. This is why naming a contingent beneficiary is important.